Microsoft champions new-look rebate plan

Microsoft has claimed its recent distributor rebate overhaul has received a warm reception from the channel, despite some initial reservations over its complexity.

From 1 July, the software giant’s four commercial distributors have been granted extra margin for selling high-growth product categories, namely security, SharePoint and management servers. Distributors are also now being rewarded for the frequency of transactions with their resellers.

Simon Aldous, partner group manager at Microsoft, said: “The old system was based solely on reach, so the new system is slightly more complex. But the initial concerns have been alleviated because our distributors are happy that the reports we provide will give them visibility of where they are.

“There is an opportunity to overachieve on the rebate scheme that was not there before.”

Aldous added that Microsoft has also upped its marketing support by a double-digit increment to drive sales of the three category products.

“SharePoint is the fastest growing technology that Microsoft has ever had in its portfolio and we are keen to drive awareness of it in the channel and provide resellers with the right tools to sell it,” he said.

Security, SharePoint and management are likely to remain the rebate hotspots until at least June 2009, but the vendor may eventually look to emphasise other categories.

Alice Smitheman, product marketing director at Microsoft commercial distributor Computer 2000, said: “I understand why Microsoft is doing this, but there is a level of complexity being introduced that is a cause for concern.”

Smitheman also expressed concerns that the average product would not be as well compensated, although added that the changes were consistent with Microsoft's direction.

Joe Hemani, chairman of Microsoft commercial distributor Westcoast, said: "The channel should be engaging with security issues as security offers more margin for resellers."

Mark Johnson, software business unit manager Europe for Microsoft commercial distributor Bell Micro, said: "Microsoft is focusing us on developing some of their more complex products, which I see as positive. Yes it is more complex, but it allows us to earn money if we make investments."

Alastair Edwards, senior analyst at Canalys, said: “This is a sensible move by Microsoft and one with which it should persevere, otherwise it will end up with complacent partners that are going after low hanging fruit.”